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Liquidity, solvency and cash flow simulation models in non‐life insurance companies: the Italian experience

Fabiano Colombini (Faculty of Economics, University of Pisa, Pisa, 56124, Italy)
Simone Ceccarelli (Faculty of Economics, University of Pisa, Pisa, 56124, Italy)

Managerial Finance

ISSN: 0307-4358

Article publication date: 1 May 2004

Abstract

This paper discusses dynamic financial approaches to solvency analysis in non‐life insurance companies by explaining cash flow simulation models which are based on the planning of their typical cash inflows and outflows. Posits that these models take into account patterns of loss reserve run‐offs and asset cash flows by implementing several hypotheses that also include expectations about external economic conditions such as inflation rates and interest rates. Acknowledges the cash inflows and outflows have been planned over a period of time to evaluate how positive net cash flow (liquidity) leads to the increase in assets over liabilities (solvency).

Keywords

Citation

Colombini, F. and Ceccarelli, S. (2004), "Liquidity, solvency and cash flow simulation models in non‐life insurance companies: the Italian experience", Managerial Finance, Vol. 30 No. 5, pp. 76-96. https://doi.org/10.1108/03074350410769083

Publisher

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Emerald Group Publishing Limited

Copyright © 2004, Emerald Group Publishing Limited